The company saw revenue growth by 2.8 per cent from 7.8 billion rand in 2013 to eight billion in 2014 during the same comparable period.
(READ MORE: Tongaat Hulett’s headline earnings up by 4%)
[DATA TON:Tongaat Hulett Limited] also reported a 1.5 billion rand operating profit up from 1.3 billion rand in 2013.
The company’s interim dividend of 170 cents per share was also reported an increase from 150 cents in the same comparable period.
“The encouraging results for the half-year ended 30 September 2014 were achieved with various improvements in the sugar operations at a time when revenue is being negatively affected by lower international sugar prices,” said the group.
“The starch operations delivered a strong performance. Land conversion and development activities continue to unlock substantial value, albeit with operating profit recognised in this half-year being below that reported in the same period last year.”
The group’s overall revenue increased by three per cent to more than eight billion and operating profit reflecting a nine per cent increase to exceed 1.5 billion rand.
The group said momentum in unlocking value from land conversion and development continues, with 8 150 developable hectares ultimately earmarked for development.
“Over the next five years, sales are expected to come primarily out of 3 661 developable hectares prioritised in key focus areas.
The areas comprise the urban expansion north of Durban in the Umhlanga and Cornubia areas, coastal lifestyle areas of Zimbali and Sibaya, business and residential development around the airport, coastal development north of Ballito in Tinley Manor and in the Ntshongweni area west of Durban.
The group said sugar prices remain under pressure with the current low world price.
“In South Africa, Zimbabwe and Mozambique there is an increasing understanding, up to senior Government levels, of the importance to better protect local markets (especially to secure rural jobs) against imports from other surplus sugar producing countries,
confirmed by the upcoming reforms to the EU sugar market,” said the company.
“The likely dynamics in the EU market beyond the October 2017 reforms remain uncertain.”
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The average sugar prices earned by the business in 2014/15 for exports into the EU market are expected to be some Euro 25 per ton below those earned in 2013/14, during
which year there was a reduction of Euro 155 per ton in the prices achieved.
Tongaat Hulett’s sugar production is targeted to grow by some 400 000 tons over the next four years.
Agricultural improvement programs are now well entrenched and these programs, together
with better weather conditions, should lead to higher cane yields and higher sucrose content in the cane, with the marginal cost of this sugar production being some 30% of the current low world sugar price.